Alabama LLC Costs
Recommended LLC Services
An LLC, or limited liability company, is a business structure that provides business owners with liability protection, special tax breaks, and a flexible management structure. It is common for business owners to think that LLC formation in Alabama is expensive and too complicated. But, it is a straightforward process worth the investment in the long run.
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Costs to start an LLC in Alabama
1
LLC Certificate of Formation fee ($208)
- You will file your Certificate of Formation with the Alabama Secretary of State.
- The Alabama filing fee for your Certificate of Formation is $208.
- Alabama offers an LLC expected service only for those filing by paper form for $100.
2
Alabama business privilege tax and annual report ($100+)
- Alabama LLCs must submit an annual privilege tax form (PPT form) before the third week of April. The PPT form is your annual report, too.
- The Alabama privilege tax varies between 0.00025% and 0.00175% of the net worth of the LLC.
- Your LLC’s exact tax rate will depend on the LLC’s income during the prior year.
- The minimum annual fee for an LLC in Alabama is $100.
3
Alabama registers agent fee (varies between $50 to $300)
- Alabama requires you to obtain a registered agent for LLC formation.
- When you hire a registered agent, you are ensuring the Alabama Secretary of State that someone is available to receive calls, subpoenas, and tax notices on your LLC’s behalf.
- The cost of an Alabama registered agent varies depending on the service you choose, your LLC needs, and state fees.
- You are allowed to act as your own registered agent in Alabama. But professionals recommend that you appoint an experienced agent or service to avoid late fees and essential deadlines.
4
Fees to form a foreign LLC in Alabama ($156 online)
- In Alabama, you must register your LLC as a foreign LLC if you have an existing one outside of the state.
- The cost for forming a foreign LLC in Alabama is $156 if you file online and $150 by mail.
- You will complete and submit the Foreign Limited Liability Application for Registration form and submit it to the Alabama Secretary of State.
5
LLC name reservation fee ($28 online)
- Alabama requires that you reserve an LLC name before submitting your Certificate of Formation.
- Reserving an Alabama LLC name does ensure that no one else can obtain it before you complete the formation process.
- You can reserve an Alabama LLC name for up to 12 months.
- LLC name reservation in Alabama is $28 if you file online and $25 by mail.
- You will complete and submit the Name Reservation Request Form for Domestic Entities form to the Alabama Secretary of State.
6
DBA filing fees in Alabama ($30 online)
- DBA is an acronym for the business term ‘doing business as.’ A DBA, or assumed name, is a registered name an individual or LLC uses to operate that is not its legal name.
- In Alabama, LLCs must register a DBA name if they use a business name other than its legal name.
- The DBA LLC filing fee for your LLC is $30 if you file online and $31.20 if you file by mail.
7
Cost of certified document copies ($10)
- You will complete and submit the State of Alabama Request for Copies or Certified Copies of Business Entity Documents form to the Secretary of State.
- The cost for certified copies of your LLC documents is $10 for the first page and $2 for every additional page.
8
Certificate of Compliance ($14)
- Banks and other financial institutions require a Certificate of Compliance when opening a new business banking account.
- You will order your certificate online using the Alabama Department of Revenue website.
- The filing cost for your Certificate of Compliance in Alabama is $14.
Steps to start an LLC in Alabama
1
Choose a business name
When choosing an LLC name in Alabama, you will need to consider a few things.
- LLC names must be unique and available for use in Alabama.
- The company name must meet Alabama LLC name requirements and restrictions.
- You will want to check for the availability of a web domain to make branding seamless.
You will use the Alabama Business Entity Records Search to conduct a name check for the availability of your LLC name.
LLC name reservation fee
According to Alabama law, you must reserve an LLC name before submitting the Certificate of Formation. Alabama allows LLCs to reserve a company name for up to 12 months.
You must complete and submit the Name Reservation Request Form for Domestic Entities form to the Alabama Secretary of State.
In Alabama, LLC, name reservation is $28 online, or $25 if you file by mail.
The cost to reserve a Alabama LLC name for up to 12 months is $28 online, and $25 when you file by mail. Alabama does not require you to reserve an LLC name.
2
Appoint an Alabama registered agent
Alabama law requires you to appoint a registered agent in the state when you form an LLC.
The price for a registered agent or service varies beetween $50 and $100 a year. The cost depends on the state and your LLC needs.
A registered agent in Alabama is an individual or business entity that receives tax forms, legal documents, subpoenas, civil notices, service of process, and other official government correspondence on behalf of a sole proprietorship, corporation, or LLC.
The registered agent you choose must be an Alabama resident or a registered agent service authorized to conduct business in the state.
ZenBusiness
- Starter Plan – $39 a year plus State Fees
- Pro Plan – $149 a year plus State Fees
- Premium Plan – $249 a year plus State Fees
ZenBusiness offers a stand-alone registered agent service. The price is $99 per year.
Northwest
- Total Out The Door Alabama LLC Formation Service Package – $59 a month and includes:
- Alabama State Fee
- Filing Service Fee
- Registered Agent
- Tax ID
- Annual Plan – $225 plus State Fees a year
LegalZoom
- Economy – $79 plus $153 Alabama filing fees
- Standard – $329 plus $153 state filing fees
- Express Gold – $349 plus $255 state filing fees
3
File Alabama Certificate of Formation
The Certificate of Formation is known as LLC Articles of Organization in other states.
You will need to wait until your LLC name is approved and you have received your name reservation certification before you submit your Certificate of Formation.
You will then submit the Domestic Limited liability Company Certificate of Formation to the Alabama Secretary of State.
Mailing address:
Alabama Secretary of State
Business Services
P.O. Box 5616 M
Montgomery, Alabama 36103-5616
The Certificate of Formation will ask you for information about your Alabama LLC.
- LLC name
- Copy of name reservation certificate
- Registered agent information
The fee in Alabama for filing your LLC Certiciate of Formation is $208.
4
Get an Alabama LLC EIN
An Employer Identification Number, or EIN, can also be referred to as a Federal Employer Identification Number (FEIN) or Federal Tax ID Number (FTIN).
The Internal Revenue Service assigns a 9-digit EIN for free. The number acts as a Social Security Number for LLCs for income tax purposes.
In Alabama, the IRS requires that all LLC owners get an EIN when converting a company from a sole proprietorship into an LLC.
Applying for an EIN is a simple process online through the IRS website.
Business banking for an Alabama LLC
Your personal and business bank accounts should be separate from one another. It protects your personal assets and credit scores.
In Alabama, lenders and banks will require a company of your Certificate of Formation, an operating agreement, and the IRS assigned EIN before allowing you to conduct business banking.
Business banking accounts are generally free, and do not have additional charges or fees.
Business attorney fees in Alabama
Business attornies come in handy when forming an LLC in Alabama. It helps to ensure a straightforward process, and your lawyer will help handle business-related issues that may arise.
Most business lawyers will offer a free consultation for a first-time client.
Professional services such as LegalZoom and Rocket Lawyer offer LLC formation packages that include comprehensive legal services.
On average, a business lawyer in Alabama will cost $300 per hour.
LLC taxes in Alabama
- Your Alabama LLC is considered a pass-through entity. It means that members file their personal tax returns rather than the LLC’s state tax return.
- You must obtain a seller’s permit through the Alabama Department of Revenue if you sell physical products or services.
- Alabama’s state sales tax rate is 4.00%, and the maximum for local and county business tax rates is 7.5%.
- LLCs that hire employees must register for Unemployment Insurance Tax with the Alabama Department of Labor.
- Alabama state taxes and federal taxes can get complicated. Hiring an expert is worthful for many LLCs.
Business licenses and permits in Alabama
Business licenses and permits vary depending on the jurisdiction of your LLC and the type of business it is.
You must obtain an Alabama business through the Department of Revenue.
A business license is in Alabama varies between $15 to $300. It is dependent on the type of business and where you are located.
In Alabama, counties and towns have various requirements and rules for permits and licenses. Always call ahead of time to ask about the process, price, and business hours.
Notary public
You may come across Alabama LLC documents that require a notarization from a notary public.
Most government agencies have one in the office if you cannot find a notary.
A notary public in Alabama can charge a max of $5 per notorial act.
Employer obligations in Alabama
- An Alabama LLC has specific obligations when they hire employees.
- The federal government requires you to verify that your employees are eligible to work in the United States. You will file Form I-9 from the USCIS Website.
- Worker’s compensation insurance is a requirement in Alabama.
- You will report all new hires to the Alabama Department of Labor.
- You can find a complete list of your employer obligations in Alabama.
Benefits of an Alabama LLC
- Business banking is made more accessible when you form an LLC in Alabama. Banks and lenders will require you to open a business banking account that is separate from your personal banking account. It reduces personal liability.
- Corporations and LLCs have different compliance requirements. When making serious business decisions, incorporations have shareholders and stock owners to answer to, while LLCs do not.
- LLCs are pass-through entities in Alabama. When you form an LLC, you help ensure that the company’s earnings are only taxed once through the member’s tax returns.
- In Alabama, by forming an LLC, you are helping to avoid being subject to double taxation. Other business structures such as C-corporations are double-taxed while LLCs are not.
FAQs
How long does it take to register an LLC in Alabama?
It will take around 1-week process an LLC registration filed by mail. Alabama does offer expedited services for documents filed by mail for an additional $100. Online LLC registration is processed immediately.
How do I dissolve my Alabama LLC?
You will file your Articles of Dissolution by mail with the Alabama Secretary of State.
The Alabama filing fee for your LLC cancellation is $100.
Do I need a business operating agreement for my LLC in Alabama?
You are not required to create or file an LLC operating agreement in Alabama. But, many LLCs opt to have one either orally or written on file to avoid future problems between management and finance.
Are there publication requirements for an LLC in Alabama?
Unlike Arizona, Alabama does not have publication requirements for LLCs. However, by publishing your new LLC, you are utilizing an easy way to advertise.
Is an Alabama LLC worth it for a small business?
The LLC costs for small businesses, entrepreneurs, and startups are well worth it because it lends your company credibility, liability protection, and access to state-specific tax benefits.
Does Alabama have a franchise tax?
In some states like New York, an annual franchise tax is part of LLC costs. However, Alabama instead has an annual business privilege tax. The minimum report fee is $100.
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